Latest Comerica Bank report shows that there is still some good news even for those car shoppers with poor credit as the amount of income it takes to purchase a new vehicle remains fairly stable with new car loans remaining affordable
New car shopping
Even car buyers with problem credit sometimes qualify for a new car and, if so, it's important they understand the market if they plan on financing one with a higher-risk auto loan.
Here at Auto Credit Express we know this information can be valuable because we've spent over twenty years helping car shoppers with bad credit find those new car dealers that can offer them their best chances for car loan approvals.
This means that in addition to understanding how the loan process works for buyers that have experienced credit issues, it's also important that they understand the current lending climate. In this case it means taking a look at the recently-released report from Comerica Bank.
Released earlier today and based on information gathered during the fourth quarter of 2012, it shows that while consumers spent more per vehicle during those last three months, new cars continue to be affordable.
It also helps answer a question we often get, which is "is it easier to get a new car with bad credit?"
New car affordability
Every three months Comerica Bank releases a report it calls its "Auto Affordability Index." The report compares the median family income in the U.S. to the purchase price of an average-priced new car to determine how many weeks it would take to cover the cost of buying and financing one. The most current results, according to today's press release, are as follows:
The purchase and financing of an average-priced new vehicle took 23.6 weeks of median family income in the third quarter of 2012. Consumers on average spent $900 more on new cars in the fourth quarter of 2012 compared with the third quarter of 2012.
Affordability dips slightly
"Auto affordability slipped slightly in the fourth quarter of 2012, declining by 0.4 weeks of median family income," said Robert Dye, Chief Economist at Comerica Bank in Dallas. "Driving the decrease in affordability was a combination of slightly higher interest rates and an increase in the average consumer expenditure per new car. Although median family income was also estimated to have increased, this increase was not enough to offset the rise in rates and expenditures. Vehicle sales through January have held up well although there has been a distortion in the recent sales data due to Hurricane Sandy. Sales surged after Hurricane Sandy to a 15.5 million unit rate in November and have since dipped to a 15.2 million unit rate by January. Downside risk from cuts in federal spending still lurks for auto sales and many other U.S. economic variables through the first half of 2013."
The Bottom Line
The bottom line to Comerica's latest report is that new cars continue to be affordable and, if you've been waiting on the sidelines, that time might be now as it appears that interest rates might be beginning to rise.
That being said, if poor FICO scores or a denial of credit from a traditional lender has been holding you back from taking that step, you should know that at Auto Credit Express we match applicants that have experienced car credit problems with dealers that can offer them their best chances for approved car loans.
So if you're ready to establish your auto credit, you can begin now by filling out our online car loans application.